Facebook IPO Has Sacramento Politicians Dreaming of Happy Days

Sure, California may be facing a $15.7 billion deficit, but the Facebook IPO has Sacramento singing, “Goodbye grey sky, hello blue.”

State senator Michael J. Rubio already has plans on how to spend the expected bump to the state’s coffers.

[SB 1252] would require the Department of Finance, in consultation
with the Franchise Tax Board and the Employment Development
Department, on specified dates, to estimate the amount of revenues
derived from income taxes imposed on income generated as a result of
capital gains related to the Facebook, Inc. initial public offering,
as provided, and would direct the Controller to transfer an amount
equal to the total estimated amount from the General Fund to the
State Infrastructure Projects Fund, a fund that would be created by
the bill. This bill would allocate the moneys in the State
Infrastructure Projects Fund, upon appropriation by the Legislature,
for various infrastructure projects, as provided.

The bill states that “California will receive an additional $2 billion through June 2013 in Facebook-IPO related income tax payments.” But, in a bit of twisted logic, it explains that “[t]he potential one-time revenue generated by the Facebook effect will not last and should therefore be set aside for one-time infrastructure projects.” If California had a balanced budget, this certainly makes sense. But, when you are $15 billion in the hole, a $2 billion lottery ticket just means you are still $13 billion short.

No surprise that the American Council of Engineering Companies of California “Likes” this bill. And, you thought engineers were good at math.